This Harper's Weekly cartoon by W. A. Rogers conveys the
perceived power that financier Jay Gould had over the stock market.

In
1860, Gould opened a Wall Street brokerage and began speculating in
railroad stock. During the Civil War, he traded in government bonds and
gold; after the war, he used his profits to buy and sell railroad companies.
In 1867-1868, Gould and his partners in the Erie Railroad Company successfully deflected a hostile takeover by flooding the
market illegally with 50,000 shares of Erie stock. In 1869, Gould's
attempt to corner the gold market left several businesses and thousands
of investors financially ruined. Together, the
"Erie War" and "Black Friday" fixed Gould’s public
image as a rapacious financial predator.

In 1872, Gould was removed as president of the Erie Railroad.
(See the cartoon for March 30, 1872, "Justice on the Rail—Erie Railroad (Ring) Smash Up.") He continued buying and selling
railroads, and became a major investor in the telegraph and mass transit
businesses. In 1881, Gould bought controlling shares in Western Union,
which handled most of the nation’s telegraphing, and part-ownership of
the Manhattan Elevated Railroad (gaining ownership control in 1886).

The context for this cartoon is a struggle between Gould's Western
Union and its competitors (note the telegraph pole intersecting the
middle of the cartoon) in a volatile stock market. Already
troubled by lawsuits in New York and Pennsylvania contesting its charter
in those states, Western Union faced another threat when in December
1882 the strategically important Burlington Railroad sought to break its
contract with Western Union. (The telegraph was essential for
coordinating the schedule and movement of trains.) The Baltimore
and Ohio Telegraph Company and other Western Union rivals positioned
themselves to provide the service.

While vacationing in Florida, Gould remained silent about the
matter. Upon his return in early 1883, he opened negotiations with
Burlington, and finally agreed to sell them his Hannibal line in return
for continuance of Western Union's exclusive contract with the railroad
company. This was a typical Gould tactic to surrender lesser
interests in order to retain or gain major ones. (In 1887, Western
Union took over the Baltimore and Ohio Telegraph Company.)

Although in 1878 Gould had suffered heavy losses in the stock market,
subsequent investments made with profits from his 1879 sale of the Union
Pacific Railroad transformed him into the most prominent barometer for
stock speculators. The country was pulling out of the long
depression of the 1870s, and Gould invested in a rising market fueled by
the highest inflation since the Civil War. He created a pyramid of
investments by using his paper profits to buy more stock, and those
profits to buy even more stock. Other investors followed his lead.

The assassination and death of President James Garfield in the summer
of 1881 caused a dip in the stock market, but did not lower the
speculative fever. It is clear in retrospect, as it was not at the
time, that the stock market was in the beginning of a three-year
decline. In December 1881, the market dropped again, and Gould
became the scapegoat. In fact, he did his best to keep the market
high. In February 1882, Gould publicly announced his intention to
buy stocks, and in March he showed a group of financiers his stock
certificates worth $40 million which he would use as collateral to
borrow $30 million for additional stock purchases. This triggered
another speculative boom and rise in the market. Within a few
months, however, the stock market had returned to its downward path.

In this cartoon, the stock market (left) is a leaky dam of watered
(i.e., overvalued) stock about to burst. On the lower-left,
investors, pictured as small and anonymous, enter the market bearing
umbrellas to protect them from the overflow, while being foolishly
impervious to the impending flood of financial ruin. Meanwhile, a
smug-looking Gould dominates the right side of the cartoon, deviously
hiding a watering can behind his back.

It was not until the summer of 1883 that Gould concluded that the
stock market would continue declining, and he began to sell some of his
stock. The market fluctuated over the next year, but the overall
trend was downward. Finally, in May 1884, there was a full-scale
financial panic which forced Gould and many other investors off Wall
Street. Although he was financially injured, Gould managed to
survive and continued his successful business interests.